Selling Power Blog

Part II: 10 Ways Configure/Price/Quote (CPQ) Software Can Skyrocket Your Revenues

  Today's guest post is by Steel Brick Founder, Max Rudman.  

 

My last post discussed why today's best-in-class sales organizations use configure/price/quote (CPQ) tools to spend more time selling, create and sustain good first impressions, and rapidly create winning proposals with the correct configuration and price.

In this post, I'll discuss five more ways CPQ automation software can help your sales force improve its performance and catapult your corporate revenues.

Top 10 Advantages of CPQ Continued…

6. Rake in additional revenue gain with less pain.
Most companies source 80 percent of their revenue from 20 percent of their customers, so you know your greatest profit potential lies in penetrating your most profitable accounts. But as post-recessionary budgets tighten, this is increasingly difficult to achieve. CPQ tools do your penetration legwork for you. As your team configures quotes and proposals, the software makes automated up-sell and cross-sell suggestions. You spend less time but increase your average quote and order size. (Source: Aberdeen Group, "Sales Enablement Advances with Configure/Price/Quote Solution," February 2011.)

7. Shrink your sales cycle.
CPQ solutions significantly diminish your workload by automating even the most complex proposal workflows, approval processes, and discounting guidelines. You'll automatically track open quotes and generate electronic approval requests when quotes exceed certain thresholds. You can even enable multistage and partial orders with the click of a mouse.

This may sound like a pie-in-the-sky promise, especially when considering that companies suffered a 1 to 12 percent delay in their lead-to-win sales cycles in 2009. But a 2010 Aberdeen study showed CPQ-empowered organizations optimized their bid-to-win effectiveness twice as well as non-CPQ users. On average, these CPQ users improved their year-over-year sales cycles by 40 percent.

That's an exciting prospect, since other industry rules of thumb show that a mere 15 percent decrease in your sales cycle length can yield a 30 percent increase in revenue.

8. Create inbound transactions.
Buyer/seller conversations have transformed as decision makers increasingly create their own brand preference with online research and social networking. In fact, Gartner predicts customers will transact 85 percent of their business without interacting with a person by 2020, so the more you empower your prospects in their research, the better off your business will be.

CPQ software solutions serve today's self-educating buyer who doesn't want to interact with the sales team until much later in the buying cycle, if at all. Because CPQ tools make your internal sales capabilities external in the cloud, your prospects can generate their own quotes online and place orders with the click of a mouse. Your sales team will exert less effort and generate the same or higher levels of revenue, which means less overhead, higher customer retention, and higher profits for you. Think of it as your sales office in the cloud.

9. Build win-win relationships with your partner channels.
Ever on the prowl for topline sales and bottom-line efficiencies, today's industry leaders are more than twice as likely to leverage channel partners in their sales strategies (32 percent versus 14 percent). These symbiotic relationships decrease selling costs and skyrocket market share, margins, and corporate revenues.

But there are barriers to channel-sales success. Your partners' sales and marketing competencies can be fragmented and yield insufficient topline revenues. De-centralization limits critical visibility into your sales pipeline. Plus, you aren't the only company vying for partner mind share. To optimize these channel relationships, you need to make it easier and more profitable for your channel sellers to represent your solutions over your competitors'.

With CPQ tools, you have a one-stop-shop solution to collaborative selling. You can easily distribute and enforce your business rules, including pricing and discount information. You'll gain and secure mind share while your partners enjoy the automated advantages of productivity, margin preservation, and heightened revenues. This will allow you to capture and track critical data to achieve a clear view into your channel-sales pipeline.

10. Optimize your margins with a minimal time investment.
It goes without saying that you want to maximize your margins, but sometimes it seems you do so only when you engage in time-consuming negotiations over narrow margins. But when CPQ software does the work, you leverage the power of automated discounting functionality that can be applied by item, by product type, or for an entire quote. You'll maximize your margins – but with a minimal time investment.

The Greatest Benefit of All: ROI

CPQ automation tools make your quoting process simpler, faster, and cheaper. They reduce sales cycle bottlenecks, enabling your team to present exactly the right product mix at the right time and cost to the right customer. Perhaps that's why CPQ-friendly sales organizations enjoy enhanced proposal quality, higher customer retention, and shorter sales cycles.

The big question in a CPQ buyer's mind is "What about the ROI?" Here is a simple way to do the math:

a) How many quotes and proposals does your sales team generate in a week?

b) How much time do your salespeople spend chasing information around pricing and configuration related to proposals?

c) What is the cost per hour per salesperson?

d) Multiply the number of hours your salespeople spend on these tasks by the cost per hour. This will give you the current cost related to CPQ tasks.

After measuring the average cost sales organizations spend on these tasks, we found that the average time to ROI for our clients is less than 60 days! (Check out Steel Brick's blog to learn how to select a CPQ vendor.)

How has your business benefited from CPQ software? Please join the conversation below.

Full disclosure: Steel Brick is not a Selling Power advertiser.

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Part I: 10 Ways Configure/Price/Quote (CPQ) Software Can Skyrocket Your Revenues

  Today's guest post is by Steel Brick Founder, Max Rudman.  

 

The recession officially ended in June 2009, but many sales organizations remain under significant economic pressure. Companies have slashed their budgets and reduced payroll to improve productivity, requiring sales teams to sell more with fewer resources. Meanwhile, shifts in buyer behaviors have lengthened sales cycles. These factors combine to create the perfect storm for today’s sales enterprise.

It's harder – and it takes longer – to sell.

But good news comes from recent Bain & Company research: Companies are twice as likely to substantially expand and maintain their market share immediately after a recession. Now is the time to make strategic investments in operational efficiency and reap the corollary topline benefits before it's too late.

Many industry leaders use configure/price/quote (CPQ) tools to inject speed and accuracy into their sales engines. In the following two-part post, I'll discuss the top 10 ways CPQ automation software can help your sales force improve its performance and catapult corporate revenues.

Top 10 Advantages of CPQ

1. Help your sales team to spend more time selling.
The average sales rep squanders 45 percent of his or her day on inefficient tasks, yet a simple 5 percent increase in selling time can increase company revenues by 20 percent. By integrating with your CRM software, CPQ software automates many time-consuming tasks and eliminates your sales team's need to reinvent the wheel. Your reps will spend less time in the office and more time out in the field doing what you pay them to do: generate leads and cultivate new business.

2. Rapidly create winning proposals.
Proposals don't win new business when they merely present products and pricing. They must also persuade your prospects with a clear and convincing message. Luckily, CPQ solutions automatically include all data sheets, case studies, and other critical content relevant to your proposal and prospect's industry. This saves your sales reps and channel partners time, eliminates human error, and inspires key decision makers to sign on the dotted line. Plus, sales teams using CPQ solutions create 80 percent more proposals per sales rep per month than non-CPQ users.

3. Know your price is right.
The more complex your offerings, the more variables will affect your pricing quotes – especially when product bundles and volume discounts come into play. Relevant pricing information is often spread across multiple sources and may not reflect your most recent pricing structures. But CPQ tools ensure that your sales reps can access current pricing information in one place and that you feel confident your outgoing proposals honor your margins and drive profits.

4. Correct configuration.
Studies estimate human error accounts for at least 30 percent of all mistakes in the workplace, especially in repetitive tasks. When your sales reps manually configure proposals or place orders, blunders are unavoidable – and they can significantly detract from your bottom line. Fortunately, CPQ software enables sales by eliminating 40 percent of human error. Not only can you add products to a deal and edit those products at the same time, you can bundle extra options, as well as product dependencies and exclusions. You'll establish rules to automatically prevent incompatible orders, generate better quotes and proposals quicker, and win more deals.

5. Create and sustain a good first impression with proposals.
Consistency is key. You know the business proposals that your sales team creates directly influence how customers perceive your brand, but it's difficult to ensure that each rep generates proposals in the same format, with an executive summary and ROI justification. CPQ tools standardize your sales proposals, giving you control over not only what is quoted, but also the proposals' appearance. Your reps will make a cohesive, professional impression that enhances your brand. You'll sign more deals and watch your renewal rates surge.

Stay tuned for part two of this post, and find out five more ways to shrink your sales cycle and rake in more revenue.

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Build a “Commissions Community” to Achieve Revenue Growth

Today’s guest post is by Talent Builders CEO, Barbara Giamanco. She is the co-author of The New Handshake: Sales Meets Social Media and capped her corporate career at Microsoft, where she led sales teams and coached executives. Throughout her sales career, Barb has sold $1B in products and services.

Special note: Register to hear Barb speak on Tuesday, April 24 during a live webinar: "5 Ways to Create a Winning Connection with Qualified Prospects." 

 

Here’s a question for all the sales leaders out there: Why it is so darn difficult to capture, leverage, and pass on the success methodology of your sales superstars? 

For the past decade, I’ve worked as a consultant with hundreds of sales leaders from top enterprise companies like Georgia Pacific, GE Healthcare, Blue Cross Blue Shield, UPS Capital Insurance Agency, Earthlink Business, Microsoft, and PepsiCo. They all say the same thing: there just doesn’t seem to be an easy way to get their top producers to share what they know with the rest of the sales team. 

Over the course of my 20-year sales career in the tech industry (during which I sold $1 billion total in products and services) I’ve personally felt this frustration many times. As the landscape of sales has changed, I think I’ve finally figured out why this frustration exists. Simply put, companies and sales leaders are not going out of their way to use technology to build what I call a “commissions community.” 

When I began my sales career as an individual contributor, the freedom of not being chained to a 9-to-5 schedule was heaven. I loved being responsible only for me. I knew that the extra effort that I put into my sales activities meant higher commissions in my pocket, and that’s exactly what I wanted. I’m betting that many members of your sales team feel exactly as I did. After all, top producers respond to three main motivating factors: 

1. The potential to earn more money
2. High-level recognition
3. Awards

Sales management can talk all day long about the importance of team collaboration, but let’s face it: that isn’t how sales reps are typically compensated. And why should top performers be asked to carry the bottom twenty percent of the team? Before I got started in sales, I’d worked with peers who dragged their feet on the job, and I hated knowing we were paid roughly the same amount of money even though I busted my butt day in and day out. Rewarding sales performance simply on the basis of individual contributions runs counter to a collaborative culture. 

Another major stumbling block that I see -- particularly among dispersed enterprise sales teams -- is communication. Conference calls and email exchanges can only take a sales team so far. There’s just no excuse for this in an era where information travels in real time. Part of the reason I decided to co-write a book specifically about sales and social media is because I realized that many sales teams are failing to adapt to today’s selling environment. Your salespeople are selling amid constant digital disruption, and B2B buyers are relying almost exclusively on the social web to search for solutions before they make purchasing decisions. In other words, buyers are deciding what they need and why, without any interaction with a salesperson. “Customer 2.0” expects salespeople to have a global view of their organization and be well versed on their specific issues and challenges. This amplifies the need for team collaboration and support. Lacking a formalized process, platform, or location for internal knowledge sharing and retention, the sales rep is left to sink or swim. And the “I can do it on my own” sales performers who try to manage the customer relationship and sales cycle without internal support or guidance and mentorship from managers and peers may find they are losing more deals than they close.

Now imagine if you could help your top performers see actual, measurable benefits from their investment in a culture of collaboration. Imagine their reaction if they knew that sharing their knowledge with the rest of the team could open the door to earning higher commissions and winning more top awards.The problem is that many sales leaders are not taking advantage of the new kinds of social learning tools that would make these things possible for top performers. A social learning platform facilitates companywide communication in real time and also serves as a repository for valuable information that reps can tap at any time. For example, reps who are stuck in a code red, “I need an answer right now or I’ll lose the attention of this prospect” situation can quickly log on and conduct a search among information that’s been logged in by top performers or experts within the company, start a real-time chat with a peer (or even someone in marketing or customer service), or tap into a wealth of recorded training sessions to find a great answer without having to wait for their sales manager to get a free moment for a phone call or answer an email. 

Aside from the intrinsic value of feeling good about coaching and mentoring their peers, how does the sales superstar benefit from taking time out to share experience and knowledge with others on a social learning platform? Some examples of what they might gain include: 

• an increased potential to close their own deals more quickly (they can actually use the benefits of a social learning platform to enhance what they’re already doing well), 
• larger commissions in their pocket, 
• greater visibility with senior management, 
• a handy way to retain their top spot in the sales organization.

Sales teams win more when they work together as a community. When sales leaders start embracing social learning, their teams will be able to share ideas and brainstorm approaches to winning sales opportunities. This is the key to unlocking the power of a “commissions community,” where everyone is motivated to put in their best effort to win on an individual as well as a team basis. But sales superstars need to have a clear understanding of the WIIFM (what’s in it for me?) factor.

Email Barb at barb@talentbuildersinc.com or find her on Twitter and LinkedIn. You can also hear Barb speak on Tuesday, April 24 during a live webinar: "5 Ways to Create a Winning Connection with Qualified Prospects." 

Is Anyone Listening to Your Online Sales Presentation?

Back when I founded Selling Power magazine, we used to write a lot about how salespeople could use nonverbal selling to communicate effectively and win more deals. In fact, in 1989 we published an article on one of the great masters of nonverbal communication, comic actor John Cleese. Although Cleese is best known for television shows and movies like Monty Python's Flying Circus, Fawlty Towers and A Fish Called Wanda, he earned equal success in the business world with his sales training company. He advised our readers on how to maintain composure in a stressful situation with a prospect or customer: 

"If you want to maintain composure under pressure, I recommend that you don't fiddle. Try to keep your hands still. Move as little as you possibly can because it looks better. If you're going to make a gesture, make it an easy, fairly big one. Try it in front of the mirror. Don't make short, small, jerky, restrictive movements." 

Today, online messaging has overtaken such traditional face-to-face contact by leaps and bounds. Many sellers today negotiate and close deals exclusively over conference calls and online interactions. Instead of body language, we use virtual presentation tools to communicate our message. Roger Courville is an author with a lot of great insights and tips about online versus offline presentations. Recently I went to his blog and found some very relevant and practical points about common presentation problems: Why use a chart if you have to explain it? Why ask your audience to be interactive and then spend the entire presentation pontificating? Why use speakerphone when it provides poor audio quality? 

Based on many of the presentations I've seen from salespeople over the years, this is advice the sales industry needs to hear. Why? Depending on the quality of the tools you use and your proficiency in using them, you have the ability to create a positive or negative presentation experience. Your slide decks and audio quality are today's equivalent of a strong handshake and good eye contact.

The bottom line is that a successful sales personality should be able to translate just as easily in an online world as the real world. Just ask John Cleese -- these days, you can find him on Twitter. 

 

Full disclosure: On Tuesday, June 14, Roger Courville will be providing insights and advice on how to execute successful presentations online during a live webinar that Selling Power is co-producing -- if you're interested in joining us, you can go here to register.

Analyze This: Why Predictive Sales Intelligence Boosts Sales Results

Why did Sequoia Capital – the renowned venture capital firm behind LinkedIn and Google – make a major investment in Lattice Engines, the front-runner in predictive sales-intelligence software? What is predictive sales intelligence, and why did Lattice Engines raise capital from Sequoia?

Shashi Upadhyay, CEO of Lattice Engines, told me in a phone conversation to think about the advances in analytics that such B2C companies as Amazon or Netflix pioneered by offering nuanced recommendations. For example, if you have purchased books about French wines on Amazon, you may get recommendations about French cookbooks or travel books about Burgundy. How does Amazon find out which books might interest you? They compare the shopping history data of other customers and find out which patterns resemble yours.

Lattice Engines is now applying the power of data and predictive analytics – a staple in the B2C world – to boost B2B sales and marketing productivity. The insight is that the explosive growth of data about companies and purchasing decision makers contains hidden but invaluable intelligence for frontline sales teams. Lattice Engines has encapsulated this vision into its sales intelligence software, salesPRISM.  Shashi explained that this is the first solution that combines a company’s internal view of its customers and prospects (e.g., purchase histories, product usage data, customer service records) with external information about these accounts and decision makers (e.g., news sources, company Websites, social media).

What’s really unique about this? It’s not about overloading reps with even more data. It’s about transforming enormous amounts of data into intuitive, simple, ongoing, account-specific recommendations for when and how to engage with each account.

Shashi, who holds a PhD in physics from Cornell University and was a partner at McKinsey before starting Lattice Engines, explained that when it comes to running a sales organization, data-driven decisions yield significantly better and measurable sales outcomes compared to the traditional, gut-feel approach.  He noted that salesPRISM is being used by thousands of reps at leading sales organizations, including ADP, Dell, and VMware, which have experienced double-digit sales productivity gains within the first year of deploying the software.

Shashi emphasized that predictive sales intelligence is not the same as backward-looking reporting. In today’s battle for improving sales, a business needs to move from looking into the rearview mirror to looking through the windshield and predicting what’s next. The big bet is that the mix of internal and external data, smart math, and a continuous flow of new, predictive, account-level insights will make reps more effective.

While data and analytics in sales have always been seen as an auxiliary to a main function (like a PowerPoint presentation to a speaker), Lattice Engines sees analytics move into the hub of a sales and marketing organization, informing every customer interaction.

The Impact of Analytics

Independent research by CSO Insights shows that when companies arm their managers with better, new information through analytics, they enjoy better results:

15% higher close rates of forecast opportunities
20% more reps meeting or exceeding quota
34% lower sales-rep turnover

Traditional analytics solutions, such as Birst, Cloud9, Right90, and SAP BusinessObjects, offer improvement in five areas:

1. Ability to better view the sales pipeline
2. Ability to measure and track sales performance
3. Ability to create more accurate sales forecasts
4. Ability to visualize performance
5. Ability to track competition

Lattice Engines goes a step further by suggesting to salespeople where future sales opportunities lie based on a rich set of internal and external data. The Intelligent Targeting module within salesPRISM enables each rep to easily identify the most promising targets (who is most likely to buy what and why?) and deliver the best content suggestions to salespeople so that they can have more relevant and productive conversations with customers.  The key to turning the recommendation into a sale is, according to Shashi, the ability to empower the salesperson with everything he or she needs to know to have the most productive conversation. That means no boilerplate pitch, but an effective conversation around business issues, effective solutions, and profitable outcomes. The ability to create dynamic, on-the-fly, needs-based talking points is called Contextual Conversations within salesPRISM.

Andrew Somosi, SVP of marketing and business development, said that when it comes to making decisions in account targeting and injecting intelligence into business conversations, there are three horizons: the salesperson’s view within his or her territory, the company’s view across all customers, and the whole market view. The trouble with relying on just our individual knowledge is that we see only what we know. With sales intelligence software,  we have the opportunity to tap into the universe of insight around us. The role of sales intelligence software is to enlighten both buyer and seller to a higher level of insight, which leads to better business decisions and happier customers.

Vital Stats:
Lattice Engines was started in 2006.

Total capital raised before this round: $1.5 million
Number of customers: 20+ Fortune 1000 companies
Integrated with salesforce.com, Oracle, Microsoft Dynamics, Custom CRM
Number of full-time employees: 70
Key industries: High tech, business services, asset management, commercial banking
Key customers: ADP, Dell, VMware

 

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